Financial Analysis: Livent (NYSE:LTHM) versus SHOWA DENKO KK/ADR (NYSE:SHWDY)

Livent (NYSE:LTHM) and SHOWA DENKO KK/ADR (OTCMKTS:SHWDY) are both basic materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Volatility and Risk

Livent has a beta of 1.77, indicating that its stock price is 77% more volatile than the S&P 500. Comparatively, SHOWA DENKO KK/ADR has a beta of 1.67, indicating that its stock price is 67% more volatile than the S&P 500.

Insider and Institutional Ownership

98.1% of Livent shares are owned by institutional investors. 0.7% of Livent shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Livent and SHOWA DENKO KK/ADR, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Livent 3 7 1 0 1.82
SHOWA DENKO KK/ADR 0 0 0 0 N/A

Livent currently has a consensus price target of $8.80, suggesting a potential upside of 50.38%. Given Livent’s higher probable upside, analysts clearly believe Livent is more favorable than SHOWA DENKO KK/ADR.

Profitability

This table compares Livent and SHOWA DENKO KK/ADR’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Livent 12.93% 11.53% 8.14%
SHOWA DENKO KK/ADR N/A N/A N/A

Earnings & Valuation

This table compares Livent and SHOWA DENKO KK/ADR’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Livent $388.40 million 2.20 $50.20 million $0.42 13.93
SHOWA DENKO KK/ADR $8.27 billion 2.86 $667.11 million $5.91 2.68

SHOWA DENKO KK/ADR has higher revenue and earnings than Livent. SHOWA DENKO KK/ADR is trading at a lower price-to-earnings ratio than Livent, indicating that it is currently the more affordable of the two stocks.

Summary

Livent beats SHOWA DENKO KK/ADR on 9 of the 13 factors compared between the two stocks.

About Livent

Livent Corporation manufactures and sells performance lithium compounds that are used primarily in energy storage, specialty polymers, and chemical synthesis application. The company offers lithium compounds for use in applications that have specific performance requirements, including battery-grade lithium hydroxide for use in high performance lithium-ion batteries; and supplies butyllithium, which is used as a synthesizer in the production of polymers and pharmaceutical products, as well as a range of specialty lithium compounds, including high purity lithium metal, which is used in the production of lightweight materials for aerospace applications and non-rechargeable batteries. Livent Corporation was incorporated in 2018 and is headquartered in Philadelphia, Pennsylvania.

About SHOWA DENKO KK/ADR

Showa Denko K.K. operates as a chemical company in Japan and internationally. It operates in six segments: Petrochemicals, Chemicals, Electronics, Inorganics, Aluminum, and Others. The Petrochemicals segment offers olefins, including ethylene, propylene, C4 fraction, cracked fuel oils, etc.; and organic chemicals, including vinyl acetate monomer, vinyl and ethyl acetate, allyl alcohol, acetaldehyde, acetic acid, and allyl ester resins, as well as polypropylene. The Chemicals segment provides functional chemicals, such as polymer emulsion and unsaturated polyester resins; industrial gases comprising liquefied carbon dioxide, dry ice, oxygen, nitrogen, hydrogen, argon, fusing ethylene, and helium; basic chemicals that include liquefied ammonia, acrylonitrile, and chloroprene rubber; and electronic chemicals, which comprise high-purity gases for electronics. The Electronics segment offers aluminum based and glass based hard disks (HDs); aluminum substrates for HDs; LED chips, epitaxial wafers, rare earth magnetic alloys, and lithium-ion battery materials; MOCVD epitaxial wafers; and advanced battery materials. The Inorganics segment provides alumina electrical fillers fused materials, abrasive grains lapping and polishing materials, plasma spraying materials, refractories, alumina for heat-radiation fillers, spherical alumina, hexagonal boron nitride, lubrication and mold-release agents, and polishing materials; and graphite electrodes. The Aluminum segment offers aluminum capacitor foils and aluminum sheets; extruded and forged products, aluminum cylinders, cast rods of aluminum alloys, compressors, heat exchangers, and power semiconductor cooling devices; and aluminum beverage cans. The Others segment engages in the general trading and building materials business; and sells chemicals, resins, metals, and electronic materials. The company was founded in 1908 and is headquartered in Tokyo, Japan.

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